Firstly, that huge spike in Spending as a % of GDP has a lot to do with a recession Sweden had at the same time as it was heavily investing in its future. Government spending as a % of GDP drops when your recession ends, and money you spent very intelligently starts to pay off. There was no reduction in the "welfare state", if anything there was an expansion of the programs that worked well and generated all the economic activity.

The reason "Nordic Austerity" works is because it isn't austerity, it is spending your money very wisely on social programs with an eye on long-term returns. That, combined with pragmatic government policy based on reality and not ideology, is what makes the Nordic countries so successful.

I do not think you are wrong in how you interpreted the article, I too had a similar reaction. What I would say is this however: 1. the amount of debt the Nordic countries had compared to the US was much less then what we experience today and especially what the future holds minus any significant changes.

You correctly point out that the Nordic public are more willing to accept govt. involvement than us in the States. However, the article does point out that the Nordic people will accept govt. involvement as long as it works... I would hope we could agree that if our govt. had a track record of successful programs, hopefully more people would "trust" the govt.

It seems to me that the Nordic people are more concerned with what works, as opposed to playing politics and unfortunately, there are two sides of America that are only concerned with politics regardless of the outcome.

Ishkur:billmarshall: "austerity" means living within your means. Why is that so wrong?

It's not, but there's something you need to understand about economies: They depend on money to move through various sectors to be healthy. If money is not moving, then that's bad. The economy crashes when the money slows down or stops moving.

Now, there are all sorts of reasons why the money would stop moving that I won't get into here. But the point is the only way to get the money to start moving again is to pour a whole bunch of it into the economy. And the only way to do that is to borrow and spend.

(there are qualifiers and variable to all this, yadda yadda...mileage varies, etc.. I'm just being really simplified here)

Austerity is the belief that, if the money slows down and the economy goes into the crapper, the only way to pull out of it is to reduce or shrink the various sectors -- in effect, take more money out of the economy. That's bad, because it means there is even less money moving around than before, which makes the economy even worse.

HempHead:billmarshall: "austerity" means living within your means. Why is that so wrong? They spent money they didn't have and then had to repay it by doing without.

Once the debt is under control they can spend again and the economy will grow.

imagine if instead of spending money on BS stimulus the government had simply borrowed HALF the moneyit borrowed, thinned out government waste and cut all taxes by 50%. as long as the tax savings was invested in america. they could have then phsed the taxes back in after two yearsd and we would be on top of the world right now.

Krugmans theory only works if the government has cash to spend on infradtucure not if they have no source of revenue.

He is an idiot.

Imagine if the government spent $500 million on putting solar power on every house in the US instead of spending $2 trillion dollars invading Iraq/Afghanistan.

Imagine if the government had spent the QE money paying off people's mortgages instead of just giving the money to the banks and keeping the mortgages on the books....

billmarshall:"austerity" means living within your means. Why is that so wrong? They spent money they didn't have and then had to repay it by doing without.

Once the debt is under control they can spend again and the economy will grow.

imagine if instead of spending money on BS stimulus the government had simply borrowed HALF the moneyit borrowed, thinned out government waste and cut all taxes by 50%. as long as the tax savings was invested in america. they could have then phsed the taxes back in after two yearsd and we would be on top of the world right now.

Krugmans theory only works if the government has cash to spend on infradtucure not if they have no source of revenue.

He is an idiot.

It also operates on the theory that someone wants to buy your debt indefinately until the economy turns around. Easier for the US, but how long would a country like Latvia be able to do so? Not long. Who wants to buy bonds that payout interest rates that are lower than inflation? He's the new Adam Smith and that worked out so well for the common person.

No doubt we'd all understand Latvia and Estonia better if someone, maybe someone on Fark, could explain this situation with an analogy. Maybe an analogy involving the trading of coconuts and fish. Or maybe digging ditches. Or perhaps via the follies of building bridges. If only we had someone like that. On Fark.

Austerity means no outlays, period. If you were a family, that means no phone, no cable, no internet (sound reasonable so far?), no gas, no electric, no water (not reasonable to you?), no rent, no mortgage, no car, no house (good luck finding a place to live and a way to work), no insurance of any sort, as little on food and clothing as possible.

Right, and this is why I find all this talk about "austerity" measures in Europe to be laughable, really.

I'll give you an example of true austerity from Ceausescu's Romania.During the 70s, the West had a relatively positive view of Romania and Ceausescu, mainly because they saw him as a critical voice of Soviet involvement in Europe (see his reaction to the Prague spring etc.). As a result, Romania was able to borrow a sizable amount of cash from the West, which the Communist party promptly squandered away.As a result, Ceausescu somehow decided that foreign debt is bad, and pretty much ran the country into the ground trying to pay back the entire debt in one decade (the 80s). That was true austerity: a great deal of what Romanians did produce was used to pay off foreign creditors. Meanwhile, food was rationed to the gram and most of the time you couldn't find it in stores anyway. Gas was rationed, electricity was rationed. You get the picture.In the old hack's defense, by the time we killed him he had actually managed to pay back the entire foreign debt, but at what price?

What's going on in Europe right now is like a family taking a look at its finances, realizing that they're spending way more than they're bringing in, and deciding "okay no more iPhones for a while, I guess some Droids will have to do for now", reduce their deficit by a little bit, use that as "leverage" to get the bank to give them a little more time to pay back what they owe, and call that "austerity".

/ Oh, and someone mentioned that "austerity" measures need to be run during a boom, to pay for the recession. Good luck with that. If you're a politician anywhere in Southern Europe, you've just dynamited any chances you had of getting re-elected.

The contraction that everyone is talking about happened during a financial collapse, and Latvia's response was austerity. The Farkers who worship Krugman act as if the initial contraction was caused by the government's austerity measures. Krugman predicted that Latvia's response to the financial crises would lead to continued contraction for the country. It hasn't. Thus Krugman is wrong and the zombie of Brietbart is automatically king of the world.... or something.

Look, Krugman should never have made any predictions about Latvia, or it's economy. It's tiny; with a GDP of 27 billion dollars. Any number of factors can cause huge swings in it's economy. In other words, it's experience doesn't prove anything one way or another.

If Warren Buffet stopped in the country long enough to take a shiat, the GDP would go up by 1 or 2%.

BigBooper:The contraction that everyone is talking about happened during a financial collapse, and Latvia's response was austerity. The Farkers who worship Krugman act as if the initial contraction was caused by the government's austerity measures.

Well no, but if you have a 24% drop in GDP and your country isn't a smoking ruin or something, you're gonna see some improvement. Latvian economic policy could have been to buy everyone in the country a ticket to a Bonnie Tyler concert and they'd have seen that 5% bounce.

BigBooper:Look, Krugman should never have made any predictions about Latvia, or it's economy. It's tiny; with a GDP of 27 billion dollars. Any number of factors can cause huge swings in it's economy. In other words, it's experience doesn't prove anything one way or another.

Gunther:BigBooper: The contraction that everyone is talking about happened during a financial collapse, and Latvia's response was austerity. The Farkers who worship Krugman act as if the initial contraction was caused by the government's austerity measures.

Well no, but if you have a 24% drop in GDP and your country isn't a smoking ruin or something, you're gonna see some improvement. Latvian economic policy could have been to buy everyone in the country a ticket to a Bonnie Tyler concert and they'd have seen that 5% bounce.

BigBooper: Look, Krugman should never have made any predictions about Latvia, or it's economy. It's tiny; with a GDP of 27 billion dollars. Any number of factors can cause huge swings in it's economy. In other words, it's experience doesn't prove anything one way or another.

100% true.

Kruggers put together a new chart showing the level of austerity to GDP. Basically, there is a linear correlation more or less between austerity and GDP, 1% of austerity relative to GDP leads to a 1% drop in GDP. Thus, this empirically disproves Paul Ryan and the other austerity pushers policies which claim that austerity leads to growth. Totally, factually wrong, period. This is all about how the 1% want to keep their 15% tax rate and push the cost of our debt onto the middle class. We should have a national referendum to ask voters whether or not to save social security and medicare, to remove the limit on SS contributions, including forms of income (i.e. dividend income must pay the 12% in SS tax).

Perhaps if you stocked Krugman books instead of Kurgman books you might have better results. Assuming you really are a used book dealer. Reason I question it? Take a look at Amazon's Krugman pages, which are somewhat at odds with your valuation:

Northern:This is all about how the 1% want to keep their 15% tax rate and push the cost of our debt onto the middle class. We should have a national referendum to ask voters whether or not to save social security and medicare, to remove the limit on SS contributions, including forms of income (i.e. dividend income must pay the 12% in SS tax).

untaken_name:HempHead: billmarshall: "austerity" means living within your means. Why is that so wrong? They spent money they didn't have and then had to repay it by doing without.

Once the debt is under control they can spend again and the economy will grow.

imagine if instead of spending money on BS stimulus the government had simply borrowed HALF the moneyit borrowed, thinned out government waste and cut all taxes by 50%. as long as the tax savings was invested in america. they could have then phsed the taxes back in after two yearsd and we would be on top of the world right now.

Krugmans theory only works if the government has cash to spend on infradtucure not if they have no source of revenue.

He is an idiot.

Imagine if the government spent $500 million on putting solar power on every house in the US instead of spending $2 trillion dollars invading Iraq/Afghanistan.

Imagine if the government had spent the QE money paying off people's mortgages instead of just giving the money to the banks and keeping the mortgages on the books....

So you want to give hand outs? Instead of loans? You'd have preferred the Fed make no money over the last few years? And instead of handing the money to the treasury, (which by the way is not the banks), you'd have let the government not fund anything...

I just realized you have no clue what happens in QE. I'm going to stop talking at you - I'd get better responses from a wall.

I find it telling that there are a multitude of reasons that Latvia's solution was a horrible idea, from the 24% contraction of their economy to a gigantic brain drain of younger Latvians, and the response is pretty much word for word "2% growth, Krugman is technically wrong, the best kind of wrong"

Yes, you can recover from shooting yourself in the foot. The idea is not to shoot yourself in the foot in the first place.

Perhaps if you stocked Krugman books instead of Kurgman books you might have better results. Assuming you really are a used book dealer. Reason I question it? Take a look at Amazon's Krugman pages, which are somewhat at odds with your valuation:

MadHatter500:untaken_name: HempHead: billmarshall: "austerity" means living within your means. Why is that so wrong? They spent money they didn't have and then had to repay it by doing without.

Once the debt is under control they can spend again and the economy will grow.

imagine if instead of spending money on BS stimulus the government had simply borrowed HALF the moneyit borrowed, thinned out government waste and cut all taxes by 50%. as long as the tax savings was invested in america. they could have then phsed the taxes back in after two yearsd and we would be on top of the world right now.

Krugmans theory only works if the government has cash to spend on infradtucure not if they have no source of revenue.

He is an idiot.

Imagine if the government spent $500 million on putting solar power on every house in the US instead of spending $2 trillion dollars invading Iraq/Afghanistan.

Imagine if the government had spent the QE money paying off people's mortgages instead of just giving the money to the banks and keeping the mortgages on the books....

So you want to give hand outs? Instead of loans? You'd have preferred the Fed make no money over the last few years? And instead of handing the money to the treasury, (which by the way is not the banks), you'd have let the government not fund anything...

I just realized you have no clue what happens in QE. I'm going to stop talking at you - I'd get better responses from a wall.

Yeah trickle down. Reagan is smiling from his grave. Does your reply apply to the solar energy give away as well?